10 Tips for Securing an SBA Loan

Loans backed by the Small Business Administration offer some of the best terms and lowest interest around. However, the application process for SBA loans carries additional requirements to qualify according to federal guidelines. Here’s what you need to do to be ready:

1. Choose the Best Loan for Your Small Business Needs

SBA loans come in several types, including term loans and business lines of credit. Getting approved for lines of credit is easier than for 10-year loans, so if you only need capital for middle-market items, this may be a great option. 

2. Take Great Care of Your Credit

The most important factor for securing any kind of financing is your business’s credit score. When you demonstrate a history of paying invoices on time and avoiding debt, banks gain increased trust in you. Take advantage of your yearly free credit report to see whether there’s anything to improve.

3. Make Sure Your Financial Records Are Accurate

Make sure all your records are in order before applying. Go over profit and loss forms, cash flow documents, accounts receivables records and other company records for accuracy.

4. Select a Lender

Different bank locations may require more documentation, and online lenders may be more lenient in matters such as time in business. Expect a trade-off between convenience and interest rates.

5. Know How To Present Your Request

Qualifying for SBA loans is similar to making a business presentation. You should be able to explain clearly why investing in your company is a great idea and how you plan on using the money.

6. Update Your Social Media Presence and Website

Many financial experts review your company’s website and your personal social media accounts. If everything looks professional, it adds points in your favor.

7. Prepare All Company Information Documents

You need more than financial records on the day of your appointment. Here is additional information often required:

  • Company founding and structure documents
  • Projected financial estimates
  • Tax ID number and tax returns
  • Business credit report
  • Liability insurance policies
  • Business plan
  • Bank statements

8. Gather a List of Assets for Collateral

Company assets can reduce the risk assumed by lenders, giving you better interest rates. Possible assets are vehicles, real estate, technology, and costly machinery.

9. Read the Loan Details Carefully

It’s OK for you to ask questions too. Make sure specific SBA loans are a great fit by requesting details about the following topics:

  • Prepayment penalties
  • Underwriting fees and other costs
  • Fixed or variable Interest rates 
  • Any periodic reports required

10. Become an SBA Loan Enthusiast

The more you learn about SBA loans, the more likely you can qualify. Getting approved takes effort, but the incredible interest rates are worth it for business growth.

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